CFPB discusses consumer financials and sets priorities – financial services

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On June 15, CFPB Associate Director Zixta Martinez delivered a keynote address at the Consumer Federation of America’s 2022 Consumer Assembly. The Deputy Director’s speech focused on four key areas of consumer protection:

payday loan: The CFPB released a research report in April that focused on payday loans and the state laws that allow payday loans to operate. Only 16 of the 26 states that allow payday lenders to operate require/allow lenders to offer advanced payment plans, the assistant director said. The CFPB will “continue to evaluate payday lending and small-credit practices,” she said.

Rent-A-Banks: The Associate Director identified the development of the small dollar lending market as an area of ​​interest for the CFPB. According to the deputy director, small lenders can use relationships with banks to circumvent state interest rate caps and licensing laws by claiming that the bank is the lender in “rent-a-bank” programs. The CFPB “takes a close look” at these systems.

Bank Fees: According to the deputy director, big banks punish customers who can least afford them with complicated bank fees and overdraft practices that drive families deeper into debt. While smaller banks, credit unions and startups are embracing business models that don’t use “exploitative penalties,” Martinez noted that it can be difficult for these companies to break into business and for customers to switch accounts — the CFPB tries to “strong competition” in this area.

Medical Debt and Credit Reporting: Consumers with unpaid medical bills often worry about the impact of their medical bills on their creditworthiness, in addition to their concerns about hospital and insurance red tape. The CFPB is “looking at everything” to find solutions to the overlapping problem of medical debt and the credit report, the assistant director said, including evaluating whether unpaid medical debt should even be included on credit reports.

Put into practice: The Deputy Director’s comments serve as an important indicator of the CFPB’s enforcement priorities. Of particular note is the suggestion that the Bureau could consider making claims against non-bank parties under “rent-a-bank” schemes. In addition, changing the content of credit reports would have a significant impact on consumers and lenders alike.

Credit bureaus and users of credit reports have received significant attention from the CFPB in recent months (we’ve discussed this trend in previous blog posts here, here, and here). Today, the CFPB issued an advisory opinion to ensure that companies that use and share credit reports and background reports have a valid purpose under the FCRA. The CFPB’s new opinion clarifies that credit reporting agencies and users of credit reports have special obligations to protect the privacy of the public. The recommendation also reminds affected companies of possible criminal liability for certain misconduct.

The content of this article is intended to provide a general guide to the topic. Professional advice should be sought in relation to your specific circumstances.

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